About GameSetWatch

GameSetWatch.com is the alt.video game weblog and sister site of Gamasutra.com. It is dedicated to collecting curious links and media for offbeat and oft-ignored games from consoles old and new, as well as from the digital download, iOS, and indie spaces.

[One of my last TGS write-ups, this panel was particularly interesting because it continued the honesty about how Japanese game firms operate worldwide -- and when do you see the bosses of Capcom, Namco, and Square all on the same stage discussing things so candidly?]

As part of a high-profile Tokyo Game Show business day panel, the heads of Japanese gaming giants Capcom, Namco Bandai and Square Enix sat down to discuss the worldwide financial crisis, the increasingly global nature of gaming, and the position of Japanese video game companies overseas, with honesty and candor in full effect.

Following an extremely blunt keynote from Yoichi Wada about Japanese game leaders' faltering position on the worldwide stage (if not the local one), a Nikkei BP moderator sat down with Square Enix's president Wada, alongside Namco Bandai boss Shin Unozawa and Capcom head Kenzo Tsujimoto, and spent an entertaining 45 minutes discussing some of the major obstacles to Japan's growth on the world stage.

The Worldwide Financial Crisis & Games?

Before the worldwide market differences were discussed, however, there was a question on whether the in-progress credit crunch and financial market turmoil would affect the companies the trio ran, whether in Japan or elsewhere.

Capcom's Tsujimoto explained that "we tend to harbor negative feelings and thoughts" towards the current crisis, but people need to find some ways to entertain themselves, especially at times of hardship. Thus, with those current games available at a reasonable price, "we shouldn't be too pessimistic."

Square Enix's Wada agreed that the market for entertainment is rarely curtailed or shrunk, even in rough times, and as long as the industry "keeps moving", things should work out. Namco's Unozawa agreed that things shouldn't be too bad, though he quipped that, for the benefit of the financial press or shareholders, he was "not able to commit to the performance of our company" in any of the remarks he made.

The Nikkei BP moderator then segued into the main topic of the panel, the discussion of Japan and globalization. As he noted, Japan has previously been successful in major areas such as the automotive and consumer electronics sectors. But in some cases -- for example the iPhone -- these areas are becoming more global, and he wondered if Japanese successes were slowing generally, not just in the game market.

Namco Bandai's Global Profile

Namco Bandai's Unozawa spoke on his company, where they are trying to create a "mindset to provide things for global market". He noted that some Bandai TV shows such as Dragonball Z are very successful outside of Japan -- but many of the shows are not.

However, the company has game franchises such as Soul Calibur which now sell significantly better outside Japan -- and Unazawa commented on the need to spend a lot of money advertising titles that might be strong in the West.

Unozawa then showed a graph featuring his company's Japanese, U.S., and European sales numbers for the first three quarters of 2006, 2007, and 2008, something the other execs would repeat for their own firms. His graph showed significant leadership in Japan, and some declines in North America (at least for the quarters surveyed) in recent years.

The executive believes that may related to the company's heavy use of the RPG genre, pointing out that the turn-based game model, where you enter a command and then your characters fight, is now "regarded as a legacy" in the U.S. and Europe. He asked whether Japan developers can (or should) make more real-time games.

He also touched upon the reverse issue, that American and European-made games have not historically sold well in Japan, with very few exceptions, suggesting that perhaps people still remember the bad localization and subtitles of the earlier Western titles released here.

How Square Enix Sees The World

As for Square Enix, Wada agreed that for Final Fantasy, Japan is still the strongest. He commented that, in general, Square doesn't have many titles that sell better outside of Japan than in. Nonetheless, Square's revenues are split 50% within Japan and 50% outside -- but, as the company executive noted, that doesn't really match the geographical size of the market.

Showing his graphs of 2006, 2007, and 2008 revenues for each territory, Wada quipped: "I don't want to explain this!" Square Enix still has the most Japan-centric revenues of the three publishers in the panel, with the others seeing close to 60% or 70% of revenues outside of their native country. In particular, the U.S. sales numbers declined notably from 2007 to 2008 for the company.

However, Wada made an extremely relevant point, suggesting: "If you focus too much on North America and Europe [with Japanese titles], it's like seeing a Western movie featuring someone who is supposedly Japanese, but doesn't look like it at all." And of course, no Western-headquartered publishers enjoy significant market share in Japan right now. Nonetheless, he believes that usability and interface are in many ways universal, and can be worked on similarly for titles worldwide.

Capcom's Worldwide Goals

Finally, Tsujimoto looked at Capcom's graphs for Japan, the U.S. and Europe, with reasonable degrees of stability, except for a major spike in Japanese revenues recently thanks to Monster Hunter. He commented on the success of the franchise in Japan, but agreed that the game could not do quite so spectacularly elsewhere if "just transferred overseas as it is".

Tsujimoto then went on to define some of the major play differences -- particularly that Japanese consumers use public transportation a great deal, so travel time is when you play your games.

As with all of the surveyed publishers, Japanese numbers were more than U.S. and Europe, but the executive noted that, with the release of Biohazard/Resident Evil 5 imminent, there's potential to change that, especially if similarly global franchises can be found.

The Capcom executive also discussed why "there should be more Japanese people enjoying Western games", noting that Grand Theft Auto (which Capcom published in Japan) has sold 500,000 copies in the territory. He believes that we're starting to see some "big growth in sales of Western titles" in Japan, as audiences become more familiar with overseas titles and global awareness grows.

Conclusion: The Road Ahead

So what of the future? Where do Japanese companies go from here? Square Enix's Wada praised the technical and creative state of Western titles, suggesting that overall they are "very well made", and that overall, he plays Western games more than Japanese ones.

Capcom's Tsujimoto was blunt on the issues, suggesting: "we are not longer at the top", though Japanese companies' capacity and skills are up there with the best. He pointed out that the survival horror genre was largely birthed and gestated in Japan, for example, as well as Final Fantasy-style epic turn-bsed RPG.

The key, as he saw it, was that the Japanese will need to collaborate with foreign companies or technology, but still have "our own unique ways of making products." He pointedly suggested that this "doesn't mean that we have become weaker, [just that] others have gained the strength".

Namco's Unozawa also analyzed where the Japanese industry is know, arguing that "maybe we had it too easy" at time of PlayStation and the PlayStation 2, when the Japanese game publishing giants could maintain growth in the overseas market.

But in many ways, he believes that Japanese developers somewhat stopped technically at the level of the PlayStation 2, and have been "maybe a bit lax" in going beyond that. Concluding with an oblique Galapagos Islands metaphor, he suggested that open communities were key to strengthening the Japanese industry's hand.

Wada's typically blunt rhetoric concluded the discussion, by noting that, with less and less boundaries and national borders, it's important to resolve major change to take the Japanese industry forward. He quipped: "I will probably never quit smoking unless someone tells me I will die of cancer tomorrow. That's the kind of situation I need" -- and one he seems to think is in progress right now for Japanese game companies.